Judge: Daniel M. Crowley, Case: 22STCV07860, Date: 2023-02-07 Tentative Ruling

Case Number: 22STCV07860    Hearing Date: February 7, 2023    Dept: 28

Defendant Uber Technologies, Inc.’s Motion to Compel Arbitration

Having considered the moving, opposing, and reply papers, the Court rules as follows. 

BACKGROUND

On March 3, 2022, Plaintiffs Cynthia Currie (“Currie”) and Raelene Danchuk (“Danchuk”) filed this action against Defendants Uber Technologies, Inc. (“UT”), Uber, Inc. (“Uber”), Uber Cab, Inc. (“UC”) and Kwang Yong Lee (“Lee”) for motor vehicle negligence and general negligence.

On May 27, 2022, UT filed an answer.

On December 29, 2022, UT filed a Motion to Compel Arbitration to be heard on February 7, 2023. On January 25, 2023, Plaintiffs filed an opposition. On January 31, 2023, UT filed a reply.

Trial is currently set for August 31, 2023.

PARTY’S REQUESTS

UT request the Court compel arbitration of the claim filed by Danchuk.

OBJECTIONS

Plaintiffs’ Objections:

Sustained:

Overruled: 1, 2, 3

LEGAL STANDARD

A petition to compel arbitration must allege both (1) a “written agreement to arbitrate” the controversy, and (2) that a party to that agreement “refuses to arbitrate” the controversy. (Code Civ. Proc., § 1281.2.) The Court shall grant the petition unless the petitioner waived the right to compel arbitration, or other grounds exist for rescission of the agreement. (Id.) 

California Code of Civil Procedure § 1290.4, subdivision (b) requires a petition to compel arbitration under § 1281.2 to be served on the parties as provided in their arbitration agreement or, if no method was agreed to, in the same manner required for service of summons, if the party to be served has not previously appeared in the proceeding and has not previously been served in accordance with this subdivision. (Miranda v. 21st Century Ins. Co. (2004) 117 Cal.App.4th 913, 928.)

Waiver of the right to arbitrate is assessed through a number of factors, including: (1) whether the party’s actions are inconsistent with the right to arbitrate; (2) whether “the litigation machinery has been substantially invoked” and the parties “were well into preparation of a lawsuit” before the party notified the opposing party of an intent to arbitrate; (3) whether a party either requested arbitration enforcement close to the trial date or delayed for a long period before seeking a stay; (4) whether a defendant seeking arbitration filed a counterclaim without asking for a stay of the proceedings; (5) “whether important intervening steps [e.g., taking advantage of judicial discovery procedures not available in arbitration] had taken place”; and (6) whether the delay “affected, misled, or prejudiced” the opposing party. (St. Agnes Medical Center v. PacificCare of California (2003) 41 Cal. 4 th 1187, 1196.)

So long as an arbitration agreement is clear and explicit in meaning, an arbitration agreement can encompass incidents or claims that occurred or accrued prior to the agreement. (Salgado v. Carrows Restaurants, Inc. (2019) 33 Cal.App.5th 356, 356, 360-361.) 

Under California law, an arbitration agreement must be in some measure both procedurally and substantively unconscionable in order for the agreement to be unenforceable. (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 114.) “But they need not be present in the same degree. . . . [T]he more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa.” (Id.) 

Procedural unconscionability focuses on two factors: oppression and surprise. (A & M Produce Co. v.  FMC Corp. (1982) 135 Cal.App.3d 437, 486.) Oppression is an “inequality of bargaining power which results in no real negotiation and ‘an absence of meaningful choice.’” (Id.) Surprise involves the extent to which the agreed upon terms are hidden away “by the party seeking to enforce the disputed terms.” (Id.)

Substantive unconscionability does not have a precise definition, but generally a contract is found to be “substantively suspect if it reallocates the risks of the bargain in an objectively unreasonable or unexpected manner.” (Id. at 487.) 

California case law establishes two categories of cases that bind non-signatories to arbitrate their claims: (1) those where a benefit was conferred to the non-signatory as a result of the contract, thereby making the non-signatory a third party beneficiary of the arbitration agreement, and (2) those where the non-signatory was bound to arbitrate because a preexisting relationship existed between the non-signatory and one of the parties to the arbitration agreement, making it equitable to compel the non-signatory to arbitrate. (County of Contra Costa v. Kaiser Found. Health Plan, Inc. (1996) 47 Cal.App.4th 237, 242.)

DISCUSSION

Compel Arbitration

On or around November 2, 2021, Danchuk was presented with an in-app blocking pop-up screen, notifying her Uber had updated its Terms of Use; Danchuck expressly agreed to the terms at this time. (Declaration of Alejandra Vasquez ¶¶ 7-8; Ex. A-B.) Danchuk agreed to be bound by Uber’s terms, access to which was prominently displayed during when the blocking pop-up screen appeared. (Id.) Danchuk was prompted with the following notice: By checking the box, I confirm I have read and agree to the Terms & Conditions and Privacy Policy.” (Id.) It contained clearly hyperlinks to the Terms of Use and Privacy Notice in the pop-up. (Id.) Plaintiffs clicked the checkbox, expressly consenting to the Terms of Use. (Id.) These terms of use clearly required Plaintiffs to resolve any applicable claims they may have against UT on an individual basis in arbitration and that both Plaintiffs and Moving Defendants waived their right to trial by jury. (Vasquez Decl. ¶ 9, Ex. C). Applicable claims included “any dispute, claim or controversy arising out of or relating to this Agreement or the breach, termination, enforcement, interpretation or validity thereof or the use of the Service or Application...,” regardless of date of accrual. (Id.)

Danchuk alleges they was injured in a motor vehicle accident on December 9, 2021, while riding in a vehicle obtained through UT. This would constitute an incident or accident resulting in injury that occurred in connection with Danchuk’s use of the service. Danchuck did not file their lawsuit until after she agreed to the Terms of Use. This occurred after Danchuk agreed to the subject agreement. Danchuk must submit to arbitration. Danchuk has refused to do so in submitting both the complaint and an opposition to this motion. 

Plaintiffs first argue that they should not be compelled to bring arbitration because there are parties not subject to arbitration involved in this case. This does not prevent arbitration—should the Court grant the motion the Court will stay proceedings pending the outcome of arbitration. At that point, Plaintiffs will be entitled to bring forward their applicable suit.

Unenforceability via Unconscionability 

Plaintiffs argue that the arbitration agreement should not be enforced because it is both procedurally and substantively unconscionable. 

The Court finds that the arbitration agreement is potentially procedurally unconscionable; in order to utilize any of UT's app’s services, a party must agree to the terms. There is no meaningful way for an individual to argue or alter the terms of the agreement. However, there is no ‘surprise’ as to the terms of the agreement. Danchuk was alerted that the Terms of Use were updated, and had to agree to those terms prior to continuing to use the Uber Rider App. There was a clear link to the Terms of Use, where Danchuk could read the exact terms of the agreement. (Ex. A.) The Terms of Use has a bolded, capitalized paragraph that says “PLEASE BE ADVISED THAT THIS AGREEMENT CONTAINS PROVISIONS THAT GOVERN HOW CLAISM BETWEEN YOU AND UBER CAN BE BROUGHT, INCLUDING THE ARBITRATION AGREEMENT (SEE SECTION 2 BELOW). PLEASE REVIEW THE ARBITRATION AGREEMENT BELOW CAREFULLY, AS IT REQUIRES YOU TO RESOLVE ALL DISPUTES WITH UBER...THROUGH FINAL AND BINDING ARBITRATION...” (Ex. C.) Even if Danchuk did not read the multipage section dedicated to the arbitration agreement, UT made clear that there was an arbitration agreement. There is no ‘surprise’ in this matter. Danchuk also argues that it is procedurally unconscionable, as it is oppressive; if Danchuk wanted a ride, she had to agree to UT’s terms. The Court is unconvinced by this argument—a ride is not a necessity, nor is UT the only service that provides rides to customers. Danchuk could have used another rideshare app, called a taxi, taken public transportation or asked for a ride from a friend. Danchuk had numerous options, but chose to use UT. As such, the Court finds that if there is any procedural unconscionability, it is minor. If Plaintiffs wish to argue unconscionability, the agreement must also be found to be substantively unconscionable.

The Court does not find the agreement to be substantively unconscionable. Substantive unconscionability usually focuses on fairness. Plaintiffs claim that in barring Danchuk’s right to jury trial, the arbitration agreement is substantively unconscionable; the Court disagrees. If merely barring jury trial was sufficient to show unconscionability, no arbitration agreement would ever be enforceable. Plaintiffs offer no additional argument as to substantive unconscionability. As the terms are not substantively unconscionable, the agreement is not unconscionable. Plaintiffs has failed to meet their burden to prove why the arbitration agreement should be unenforceable. The Court grants the motion.

CONCLUSION

Defendant Uber Technologies, Inc.’s Motion to Compel Arbitration n is GRANTED. Danchuk is ordered to arbitrate their claims against UT. The action is stayed pending the outcome of arbitration.  The Court sets a status conference as to the Arbitration on July 12, 2023 at 8:30 a.m. in Dept. 28.

            Moving party is ordered to give notice of this ruling.

Moving Party is ordered to file the proof of service of this ruling with the Court within five days.

The parties are directed to the header of this tentative ruling for further instructions.